Creditor banks are expected to oppose JAL's reconstruction plan.

Daily Yomiuri Online is reporting that the draft plan for Japan Airlines’ reconstruction compiled by a task force of corporate turnaround experts is certain to face many obstacles, including from the airline’s creditor banks.

The task force was launched under the authority of Construction and Transport Minister Seiji Maehara.

The draft report includes seeking a debt waiver of about 250 billion yen, a debt-for-equity swap worth tens of billions of yen, and laying off more than 9,000 employees.

Some financial institutions have expressed reservations over the size of the debt waiver, while there is growing unrest among JAL employees toward the stepped-up restructuring measures.

On Tuesday, the task force explained the details of the draft report to JAL and its main creditor banks, including the Development Bank of Japan. As of the end of March, the nation’s flag carrier had about 800 billion yen in interest-bearing debts. With the debt waiver and debt-for-equity swap, the amount of assistance from financial institutions for these debts will total nearly 300 billion yen.

The plan aims to increase the airline’s financial standing, coupled with capital reinforcement through public financial assistance, and also reduce interest payment burdens. read more…